Dollar struggles after U.S. Treasury secretary’s comments on currency wars
The dollar continued to struggle to rise after the U.S. Treasury Secretary Jacob Lew on Friday warned of the risk of currency battles hurting the global economy.
“If other countries start moving towards competitive devaluation, it will start a chain reaction,” said Lew. The comments came after Tokyo’s repeated verbal warnings about the Japanese currency’s strength, as a strong yen adds to the headwinds threatening to pull the economy back into contraction.
The WSJ Dollar Index BUXX, -0.07% a measure of the dollar against a basket of major currencies, was down 0.02% at 86.87.
China Slowdown Shows Debt Addiction Will Be Tough to Shake
China’s run of disappointing April data underscore the bind facing policy makers seeking to cut capacity from the worst-performing sectors and curb credit excesses in recovering ones without stalling the economy.
Bloomberg’s monthly gross domestic product tracker shows growth slowed to 6.88 percent in April, from 7.11 percent in March. Weak steel and coal output dragged on industrial production, which increased 6 percent from a year earlier versus economists’ forecasts of 6.5 percent, while retail and investment readings also disappointed, according to reports released on Saturday. A day earlier, data showed a slump in new credit last month.
"Even with substantial stimulus at work, the accumulated problems of high debt and industrial overcapacity mean that the pass-through to stronger activity remains decidedly muted," Bloomberg Intelligence economists Tom Orlik and Fielding Chen wrote in a note. "The fact that only policy-driven sectors (infrastructure and real estate) are doing well is a reminder that stimulus has yet to revive the animal spirits of China’s entrepreneurs."
Crude oil prices rose higher in early Asian trade Monday
Crude oil prices rose higher in early Asian trade Monday, but analysts said gains were likely to be limited given a lack of catalysts to pull prices in either direction.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in February CLM6, +1.71% last traded at $46.80a barrel, up $0.59, or 1.3%, in the Globex electronic session. Brent crude LCON6, +1.84% on London’s ICE Futures exchange gained $0.63, or 1.3%, to $48.46 a barrel.
Oil prices fell on profit-taking but ended last week higher. Nymex oil was on its 10th winning week in the past 13 weeks while Brent rose for five weeks in a row in the past six weeks.
“Prices are definitely on an uptrend, but profit-taking will keep prices under $50 for a while unless there are any dramatic events that could help rebalance the market,” Gao Jian, energy analyst at SCI International said.
OPEC signals greater oil glut in 2016 as its output surges
OPEC said the global oil market is oversupplied and signaled the glut may increase this year, as surging output from its members makes up for losses from other countries whose production has been hit by a price fall.
Supply from the Organization of the Petroleum Exporting Countries (OPEC) is climbing after sanctions on Iran were lifted and an initiative with Russia and other non-members to tackle a supply glut by freezing output failed last month.
OPEC pumped 32.44 million barrels per day (bpd) in April, the group said in a monthly report citing secondary sources, up188,000 bpd from March. This is the highest since at least 2008, according to a Reuters review of past OPEC reports.
"Fundamentally, oversupply still persists," OPEC said in the report published on Friday. "Oil output remains high."
Reference: MarketWatch, Bloomb
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